CRM - November 2007 - (Page 32)

BUILDING CUSTOMER LISTS of being inexpensive, and with deeper analysis marketers are likely to find that compiled lists do contain a significant amount of information.“You can do a little bit of manipulation with those lists PLENTY OF FISH IN THE SEA The list-building industry is booming. and, in fact, you can build predictive “You do a search on Google and every- models using that data as well to make one and their brother is trying to sell those lists work better for you,” Hren says. The other type of list is a vertical list, you a list,” says Rebecca Wettemann, vice president at Nucleus Research. bound by some shared attribute or charBlame technology and a global economy acteristic. Vertical lists are more targeted for that: The cost of building a basic list and, thus, more expensive. To get down has dramatically decreased, Wettemann to that personalized, one-to-one contact says, especially because “so many firms is, as Hren puts it, “the Holy Grail” of and places like India [are] able to con- marketing communication. “So the tradeoff there is the cost of tract and build a list for you.” the list and the power of The challenge, then, is analytics. Ultimately, you’ve determining how accurate got to come down to knowthe list actually is. “Those [ing] your audience, knowlists are gathered and created [ing] your marketplace, and from a multitude of sources, fit[ting] your product or sera mind-boggling array of vice to that,” he says, before sources,” Hren says. Even adding that the real trick when the list is from a is doing all that in a cost“known” source, businesses “YOUR CAN effective manner. still have to be careful. Take, While most businesses for example, The Right Start, BE VERY, VERY GREAT IF spend money and energy on a retail company that sells YOU START baby and infant products: MISCOMMUNICATING.” customers and prospects, the two groups are usually (and After a series of acquisitions, rightfully) treated differently. bankruptcies, and closures, the company had to find its own right Businesses, Hren says, “have to acquire, start just three years ago. That was when grow, and retain so they’re working their Senior Vice President of Marketing and inside list [as well as] finding new acquiStrategy Hope Neiman and her team sitions.” RDS Delivery Service, a New were buried by a list of 500,000 names. York–based messenger and courier ser“We were told—the operative word vice, segments its list into several groups: being told—that they were double opt- customers; inbound and outbound ins, and we found out pretty quickly prospects; a circle of influencers; and lost that they weren’t,” she says. In fact, all customers. Each group receives a differNeiman was told was that the half- ent campaign depending on its relationmillion names were The Right Start cus- ship to the company. (See “Real ROI,” tomers. “You have no idea where these page 45.) For some businesses, even cernames really came from,” Neiman says. tain members of the existing-customer “Were they partnerships [the acquired group may warrant different treatment. companies] had? Were they actually For customers with a track record of a decade or longer, Hren says, “you may customers?” Industries currently work with two want to talk to them differently than the general types of lists. First, there are com- customers who just made their first purpiled lists, which are “just like the White chase.” Failure to handle this division delPages,” SPSS’s Hren says. “It’s, like, ‘some icately can prove disastrous, he adds: evidence that this person has existed.’” “Your loss can be very, very great if you These types of lists are not very selective start miscommunicating.” According to industry experts such as or unique—but they do have the benefit knowing whom to target will be much less costly and far more beneficial in the long run than a massive outreach would be. Frederick Reichheld, director emeritus at Bain & Co., acquiring a new customer can cost six to seven times more than retaining an existing customer. (See “Influential Leaders: The Loyalist,” September 2007, page 24.) “Some marketers may, in fact, lose money on newcustomer acquisition,” Hren says, adding that those customers “will make up the ‘loss’ in terms of longer-term value.” He continues, “The investment in any single name might be spread over a longer time period.” Cell phone companies, for example, often do not profit from a given customer until well into the second year of a subscription, throughout which they’ve been continually soliciting for new phones and accessories. Moreover, in some industries, businesses may lose up to half of their customer base within a five-year period. But customers leave—that’s a given. Marketers have to take into account the reason for leaving, learn from it, and continue to replenish their databases while also pursuing the next generation of customers. The path to cost-effectiveness varies from business to business and depends highly on each company’s purpose, budget, and goals, according to Hren. los CHANGING COURSE “The marketplace [has] shifted,” Hren says. “What used to be sort of a ‘push’ marketing”—sending information out to people—“is now becoming customerdriven,” or what’s called “pull” marketing. Deploying analytical services like SPSS’s PredictiveMarketing allows businesses to collect customer data, and to turn that data into actionable advice for building the most receptive customer list. FBTO, a Netherlands-based insurance company, realized it had to accommodate the customer’s needs rather than push the products it wanted to sell. FBTO was sending out 1.2 million pieces of marketing material each year and was utterly dissatisfied with the results. By better understanding its customer list using PredictiveMarketing, FBTO recognized the need to depart from all-encompassing generic messages to targeted ones—an improvement that www.destinationCRM.com 32 CUSTOMER RELATIONSHIP MANAGEMENT | NOVEMBER 2007 http://www.destinationCRM.com

Table of Contents Feed for the Digital Edition of CRM - November 2007

CRM - November 2007 Contents Front Office Reality Check Customer Centricity Have You Caught It? The Mother of Enterprise Information Market Focus: Technology: The Simple Truth about Complex Manufacturing Q&A: Gianforte Talks CRM Required Reading Predicting Profitability Checking the Pulse of the Contact Center Cast a Narrow Net Modern Times, Modern Methods Primos Hunting Calls Snares Efficiency Nailing It Down Moving in on Mortgage Delinquencies RDS Delivery Delivers on Service Secret of My Success Re:Tooling The Tipping Point Pint of View

CRM - November 2007

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